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Written by: Howard Tillerman
Howard Tillerman is the Chief Marketing Officer for Step By Step Business and an award-winning marketing professional.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on August 18, 2021
Investment range
$4,000 - $13,000
Revenue potential
$100,000 - $200,000 p.a.
Time to build
3-6 months
Profit potential
$80,000 - $110,000 p.a.
Industry trend
Declining
Commitment
Full-time
Here are the most important things you need to know if you want to open a bail bonds business:
Because a bail bonds business primarily entails dealing with people and legalities, weighing the pros and cons is essential in measuring its viability. That’s why we’ve listed the information you need to know before setting your business in motion.
The pandemic has altered the economic landscape by increasing unemployment and financial losses. This has increased poverty and reduced disposable income for many US consumers. As a result, COVID-19 has shifted the bail bonds industry toward recovery.
Trends
Challenges
Setting up your own bail bonds business will set you back between $4,000 and $13,000, with an average cost of $8,500. Assuming you set up a home office to start, a big portion of your budget will be allocated to marketing in order to gain clientele, in addition to computers and other office equipment.
Insurance can also be a recurring but necessary expense as bail bond businesses benefit significantly from protecting their legal risk associated with the forfeiture of the bail amount. A $2 million general liability insurance policy usually costs from $97 to $119 per month.((https://generalliabilityinsure.com/small-business/bail-agent-insurance.html)) If you have more funds for insurance, you can secure broader coverage.
The equipment you would need to get your bail bond business up and running is fairly simple. Some of them may already be in your possession:
| Start-up Costs | Min | Max | Average |
|---|---|---|---|
| Mandatory pre-licensing class | $750 | $750 | $750 |
| Company incorporation, licenses, and permits | $250 | $750 | $500 |
| Insurance | $350 | $1,650 | $1,000 |
| Computers and equipment | $1,000 | $3,000 | $2,000 |
| Branding, marketing, and advertising | $1,000 | $5,000 | $3,000 |
| Website | $250 | $1,000 | $625 |
| Hiring | $0 | $350 | $175 |
| Miscellaneous | $400 | $500 | $450 |
| TOTAL | $4,000 | $13,000 | $8,500 |
Considering that only a small share of defendants show up to their court hearings, being a bail bonds provider can be an attractive venture. But to measure profitability, we need to consider the average bail amount and the average fee charged by bail bond firms.
The median bail amount for US felonies is about $10,000, with bail bonds companies generally charging clients 10%–15% of that amount for their services. This means that for every $10,000 bail you service, you’ll take in about $1,000 in revenue.
For more severe crimes that incur bail amounts up to $1 million, the fee can fall as low as 1%. But even with the reduced percentage, it’s still a win for you because of the higher monetary value. For example, a $1 million bail bond will provide your firm with $10,000 in revenue.
In your first year or two, you might service a little more than half the industry average of 177 clients. If you’re able to service 100 clients in a year at the $10,000 median bail, that would mean $100,000 in annual revenue. With a profit margin of 80%, you would end up with $80,000 in profit.
After a couple of years, you might be able to provide bonds for 200 clients, which would give you $200,000 in annual revenue and about $110,000 in profit due to higher overhead and a margin of 55%.
Setting up your bail bonds service can be challenging because it must meet some very stringent requirements.
The industry has an extremely regulated space with extensive requirements like background checks and fingerprinting.
Before you get your foot in the door, you’ll have to make sure you have all the necessary paperwork and pass the background check. You’ll also need to assess whether you meet all of the requirements to become a bail bonds agent. The main requirements are:
On top of this, certain laws and regulations dictate how bail agents do their business. From how you execute your bond to the way you can interact with law enforcement and clients, different states have specific regulations to which you must adhere.
Some states prohibit setting up a private bail bond business.
The laws vary by state. Nebraska has eliminated commercial bail bond businesses, for instance, while in Virginia commercial bail bond agents must have insurance. So, make sure you double-check your state’s requirements.
Bail bond agents must undergo an approved training program to become licensed.
To become a bail bond agent, you’ll need a license. This will require you to complete a state-accredited course and exam. Some states require apprenticeship work and/or Continuing Education Credits, so it’s a good idea to confirm with your local government.
Now that you know what’s involved in starting a bail bonds business, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
The bail bonds business has grown over the years mainly due to the fact that most Americans live paycheck to paycheck and don’t have enough saved up for emergencies. In fact, about 28% of Americans have less than $1,000 in savings.((https://www.forbes.com/advisor/banking/savings/average-american-savings/))
This presents an opportunity for bond services to step in and provide the essential financial backing that defendants need to stay out of jail during their trial period. As such, the ideal environment for a bail bond business to flourish are areas that have:
To guide you better, we’ve compiled the list of states where the above-mentioned three attributes are favorable for a bail bonds business that new entrants can seize:
| Rank | High Crime Rate | High Poverty | Low Disposable Income |
|---|---|---|---|
| 1 | New Mexico | Mississippi | Hawaii |
| 2 | Arkansas | Arkansas | Mississippi |
| 3 | Louisiana | West Virginia | Oregon |
| 4 | Colorado | Louisiana | South Carolina |
| 5 | California | Oklahoma | West Virginia |
| 6 | Tennessee | Alabama | Georgia |
| 7 | Missouri | New Mexico | Arizona |
| 8 | South Carolina | Kentucky | Kentucky |
| 9 | Nevada | Indiana | Alabama |
| 10 | Alaska | Missouri | New Mexico |
Once you’re ready to step into the business, you’ll need to do a feasibility study of the city or state where you want to open up your business. Speaking with law enforcement officers, defense attorneys, prosecutors, and competitors will help you understand the local market dynamics and the demand for a bail bond service in your target area.
There are many types of bail that are granted by the court. These vary based on jurisdiction and your clients can request any of them.
Here’s a list of some of the most common types of bail:
Most bail bond businesses charge 10%–15% of the total bail. However, there’s room for flexibility depending on factors like the bail amount, the severity of charges, and the client’s reputation. For severe crimes with huge bail amounts, some companies charge as little as 1%.
Indeed, many bail bond businesses offer a sliding rate. A $10,000 bond will mean a 15% fee, for instance, while a $100,000 bond will result in a 5% fee.
Once you know your costs, you can use our profit margin calculator to determine your markup and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
The key target market for a bail bond business is individuals who get arrested by law enforcement agencies and are charged with minor to severe criminal offenses in the court of law.
You may get clients by approaching them directly or by reaching out to them indirectly through lawyers and law enforcement. Building rapport with defense attorneys and law enforcement is a great way to get referrals because these are the people who regularly deal with your target market.
In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office. Most bail bond businesses prefer to establish offices near city courts, police stations, and jails. They usually target customers by putting up visible signage to indicate their office location.
Find commercial space to rent in your area on Craigslist, Crexi, and Commercial Cafe. When choosing a commercial space, you may want to follow these rules of thumb:
Here are some ideas for brainstorming your business name:
Discover over 230 unique bail bonds business name ideas here. If you want your business name to include specific keywords, you can also use our bail bonds business name generator. Just type in a few keywords, hit Generate, and you’ll have dozens of suggestions at your fingertips.
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to bail bonds.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your bail bonds business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Choose Your State
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online, or by mail/fax. Visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best options, other than friends and family, for funding a bail bonds business.
Starting a bail bonds business requires obtaining a number of licenses and permits from local, state, and federal governments. Before you apply for licensing and permits, you first have to make sure that a bail bond business is legally permitted in your state. Here’s a list of states that do not allow commercial surety bonds:
In addition, Massachusetts, Texas, and Georgia impose strict regulations on private bail bond businesses, so you may want to steer clear of those states as well. Once you know that you can legally set up a bail bond business in your chosen state, you need to contact your local authorities to find out the required permits and licenses since they vary per state.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money you’ll need a place to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your bail bonds business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur, particularly with a bail bonds business. Insurance protects you from unexpected events that can have a devastating impact on your business. As a bail bond business, insurance is essential in minimizing your financial risk and securing your future.
With the right coverage, you can take care of unforeseen financial damages so your business can stay afloat. Here are some of the top options:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
Industry-specific tools like eBail provide all-in-one solutions that help in creating bonds, sending contracts, and even tracking defendants.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech savvy, you can hire a web designer or developer to create a custom website for your business.
However, people are unlikely to find your website unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Here are some powerful marketing strategies for your future business:
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your bail bond business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.”
The main USP of bail bond companies is that they eliminate financial risk for the defendant by carrying that risk for them — this is the selling point that you should emphasize. The defendant will only pay 10% of bail, retaining 90%, which can be used to hire a qualified attorney.
To make things even more appealing, the 10% fee to be paid by the defendant to your bail bond business can be settled through easy installment options paid over a specific period. This payment method will make your services further affordable for cash-strapped clients and increase your chances of attracting business.
Another strategy you can implore is offering value-added services such as professional advice on bail requirements and practical tips to help them stay out of jail. Not only will this approach make them see your level of expertise, but it will also establish a human connection with them as they feel that you care for them as much as their attorney and desire a positive outcome of their court case.
You may not like to network or use personal connections for business gain but your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a bail bond business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in bail bonds for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in bail bonds. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a bail bond business would include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
It’s unfortunate that this kind of business thrives when there’s too much poverty and the crime rate is high. But somebody’s got to do it.
Keep in mind that you’ll have to conduct market research, comply with all laws and regulations, and make sure a bail bonds business is allowed to operate in your preferred location. We’ve listed the states that are conducive to a bail bonds business, so you might want to consider exploring those areas.
You’re now ready to start your entrepreneurial journey and help some people by putting up bail bonds. You’ll be making real money in no time!
A bail bond is a highly profitable business and has an average fee of 10% of the bail amount. Although there are a few cases of bail jumpers reported each year, companies report that it can be as low as 1% of their total clients. The industry as a whole has pledged nearly $14 billion of bail and generated over $2 billion of revenues.
If you perfectly balance your risks and rewards, you can make a lot of money from the bail bond business. For successful businesses, just 1% of clients will abscond the court, resulting in forfeiture of the bail money. As we mentioned, you can expect to make $1,000 from each client which can be highly profitable even if you only hit half the industry benchmark of 89 clients.
A $100,000 bond cost will vary from company to company. Some companies might charge as low as 1% while others may charge up to 5% or even higher. Accordingly, you should expect to pay from $1,000 to $5,000 for a $100,000 bond.
The most common type of bail bond is a surety bond. This type of bond involves a bail bondsman or bail bond agency providing a guarantee to the court that the defendant will appear for their scheduled court hearings.
To market your bail bonds business effectively, establish an online presence, advertise locally, network with professionals in the legal field, encourage online reviews and testimonials, and create educational content.
The process for obtaining surety bonds involves submitting an application, undergoing underwriting and approval, paying the bond premium, facilitating the release of the defendant, and ensuring compliance with court obligations.
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